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What to Consider Before Taking Personal Loans from Moneylenders

At one point in life, people need more money than they currently have to fulfill their various personal requirements. For example, one may want to expand their business, buy a property, or take a luxurious family vacation. A salary alone may not be enough to fulfill these desires and one may not qualify for a bank loan due to strict requirements and low credit scores.

In Singapore people turn to moneylenders for quick loans and money advances. A moneylender is an individual or company that loans people money, secured only by a note and deed of trust, or against a collateral item or property that is equivalent or of higher value than the loan given. The main difference from banks and other financial institutions is the high-interest rates charged which they say is justified by the risk involved.

The vibrant money lending industry of Singapore is regulated by the Moneylenders Act of 2008 and Moneylenders Rules of 2009.

Here are some points to consider before seeking financing from money lenders in Singapore.

Are there other cheaper solutions?

Money lending is one of the most expensive sources of financing. It is characterized by high-interest rates with few rogue operators (loan sharks) who lure unsuspecting customers into unfair deals. One must explore other alternative options for financing that are cheaper are less risky. Depending on what one wants to use the money for it may be easier and cheaper to borrow the money from a friend or family member. The problem here is that some people tend to take returning the borrowed money for granted by either not refunding or taking too long to refund. This creates bad blood between the relatives and ruins future opportunities for support.

Banks and other financial institutions offer cheaper loans that have better repayment terms than money lenders.

How much do you need?

If money lenders are the only way to get credit, one must ensure that they have a good idea of how much they need. The best way to determine this is to create a cash-flow projection. There are apps for Android and Mac device users that help individuals and entrepreneurs make financial projections to determine how much they need and how they will use the funds.

How much is the collateral worth?

Individuals often think that if they have a piece of equipment or property worth $100,000, they can borrow an equal amount by pledging the equipment or property as collateral. That is not how it works. The money lenders will value the asset way below ideal value, and then lend up to a certain percentage of the value of the asset.

How will the money be repaid?

Some serious money lenders may ask one to provide projections on how one intends to repay the money. Yet, some do not care as long you have attacked collateral and they have a way to recover their money when you default on repayment. Are you an employee? If yes, and you intend to use your salary to pay off the loan, you must ensure that there are enough surpluses to cater for it. Other possibilities are like, selling of an asset. One must then ensure that the process starts so that they do not lose the collateral or get harassed by the moneylenders.

If one relies on business it is wise to check whether there is enough wiggle room so that in the event you lose a few customers, you are still able to make the weekly or monthly repayments.

What will the money be use for?

Is the money borrowed being used to pay rents, payroll or other routine operating expenses? Then it is not going to generate more revenue from the loan. This will not remedy one’s financial situation. Instead, borrowed finances must be used to generate more revenue with time to help reduce borrowing in the future. One can also invest in assets whose value will appreciate like property and real estate, stocks and so on.

If one dies, how is the loan repaid?

Most people do not like to think about this very uncomfortable subject. But in the event of death, unpaid loans affect family members. Some people may think that if they die that’s it. But that is not the case, money lenders and banks will not cancel out debts in the event of death. They will follow up either on the collateral which could be a family home or an existing life insurance policy. Whichever the case it is important to understand the lender’s policy. In addition, the available insurance options and remedies in the event of death to protect the family.

Conclusion

Once a borrower has gone through self-analysis and decided that they have to borrow from a moneylender, they should check whether the moneylender they choose is authentic and registered. If their profile is real, the lender’s name and license number will be in the Ministry of Law list. This list is easily available online. The list also provides names of suspended traders.

Since 1985, Best Credit SG Pte Ltd has been one of the best solutions for short term cash problems. Our loan services cater not only to individual needs but business needs as well. The comprehensive range of services we have will definitely be able to help you out of any cash problems.

Anyone in need of money is welcome to apply with us. As one of the best money lender in Singapore, we will do our best to help solve your problems. You can check out our reviews online, we are one of the highest rated money lender review.

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You can walk in any time between Monday to Friday 11AM – 8PM and Saturday to Sunday 12PM – 5PM. Our loan consultants will be able to provide you with a free one on one consultation. It is a non binding consultation. So you do not have to worry about anything!